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Turbotax For Military

Turbotax for military 19. Turbotax for military Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. Turbotax for military This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Turbotax for military Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Turbotax for military However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Turbotax for military For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Turbotax for military This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Turbotax for military Table 19-1 summarizes the features of the student loan interest deduction. Turbotax for military Table 19-1. Turbotax for military Student Loan Interest Deduction at a Glance Do not rely on this table alone. Turbotax for military Refer to the text for more details. Turbotax for military Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Turbotax for military Loan qualifications Your student loan: • must have been taken out solely to pay qualified education expenses, and • cannot be from a related person or made under a qualified employer plan. Turbotax for military Student qualifications The student must be: • you, your spouse, or your dependent, and • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Turbotax for military Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Turbotax for military Phaseout The amount of your deduction depends on your income level. Turbotax for military Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Turbotax for military It includes both required and voluntary interest payments. Turbotax for military Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. Turbotax for military Loans from the following sources are not qualified student loans. Turbotax for military A related person. Turbotax for military A qualified employer plan. Turbotax for military Exceptions. Turbotax for military For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Turbotax for military An individual can be your dependent even if you are the dependent of another taxpayer. Turbotax for military An individual can be your dependent even if the individual files a joint return with a spouse. Turbotax for military An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Turbotax for military Reasonable period of time. Turbotax for military Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Turbotax for military Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Turbotax for military The expenses relate to a specific academic period. Turbotax for military The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Turbotax for military If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Turbotax for military Academic period. Turbotax for military An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Turbotax for military In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Turbotax for military Eligible student. Turbotax for military This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Turbotax for military Enrolled at least half-time. Turbotax for military A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Turbotax for military The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Turbotax for military However, the standard may not be lower than any of those established by the U. Turbotax for military S. Turbotax for military Department of Education under the Higher Education Act of 1965. Turbotax for military Related person. Turbotax for military You cannot deduct interest on a loan you get from a related person. Turbotax for military Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Turbotax for military ), Your lineal descendants (children, grandchildren, etc. Turbotax for military ), and Certain corporations, partnerships, trusts, and exempt organizations. Turbotax for military Qualified employer plan. Turbotax for military You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Turbotax for military Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Turbotax for military They include amounts paid for the following items. Turbotax for military Tuition and fees. Turbotax for military Room and board. Turbotax for military Books, supplies, and equipment. Turbotax for military Other necessary expenses (such as transportation). Turbotax for military The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Turbotax for military Eligible educational institution. Turbotax for military An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Turbotax for military S. Turbotax for military Department of Education. Turbotax for military It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Turbotax for military Certain educational institutions located outside the United States also participate in the U. Turbotax for military S. Turbotax for military Department of Education's Federal Student Aid (FSA) programs. Turbotax for military For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Turbotax for military An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Turbotax for military The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Turbotax for military The educational institution should be able to tell you if it is an eligible educational institution. Turbotax for military Adjustments to qualified education expenses. Turbotax for military You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Turbotax for military See chapter 4 of Publication 970 for details. Turbotax for military Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. Turbotax for military Loan origination fee. Turbotax for military In general, this is a one-time fee charged by the lender when a loan is made. Turbotax for military To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Turbotax for military A loan origination fee treated as interest accrues over the life of the loan. Turbotax for military Capitalized interest. Turbotax for military This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Turbotax for military Interest on revolving lines of credit. Turbotax for military This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Turbotax for military See Qualified Education Expenses , earlier. Turbotax for military Interest on refinanced student loans. Turbotax for military This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Turbotax for military If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Turbotax for military Voluntary interest payments. Turbotax for military These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Turbotax for military Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Turbotax for military Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Turbotax for military Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Turbotax for military Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Turbotax for military For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Turbotax for military Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Turbotax for military Your filing status is any filing status except married filing separately. Turbotax for military No one else is claiming an exemption for you on his or her tax return. Turbotax for military You are legally obligated to pay interest on a qualified student loan. Turbotax for military You paid interest on a qualified student loan. Turbotax for military Interest paid by others. Turbotax for military If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Turbotax for military See chapter 4 of Publication 970 for more information. Turbotax for military No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). Turbotax for military How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Turbotax for military However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Turbotax for military You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Turbotax for military For details on figuring your MAGI, see chapter 4 of Publication 970. Turbotax for military How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. Turbotax for military However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. Turbotax for military To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Turbotax for military Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Turbotax for military For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Turbotax for military Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Turbotax for military However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Turbotax for military For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Turbotax for military To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Turbotax for military Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Turbotax for military You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Turbotax for military The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Turbotax for military The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Turbotax for military Table 19-2 summarizes the features of the tuition and fees deduction. Turbotax for military You may be able to take a credit for your education expenses instead of a deduction. Turbotax for military You can choose the one that will give you the lower tax. Turbotax for military See chapter 35, Education Credits, for details about the credits. Turbotax for military Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Turbotax for military Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Turbotax for military You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. Turbotax for military You paid the education expenses for an eligible student. Turbotax for military The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Turbotax for military Qualified education expenses are defined under What Expenses Qualify . Turbotax for military Eligible students are defined later under Who Is an Eligible Student . Turbotax for military Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Turbotax for military Your filing status is married filing separately. Turbotax for military Another person can claim an exemption for you as a dependent on his or her tax return. Turbotax for military You cannot take the deduction even if the other person does not actually claim that exemption. Turbotax for military Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Turbotax for military You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Turbotax for military More information on nonresident aliens can be found in Publication 519, U. Turbotax for military S. Turbotax for military Tax Guide for Aliens. Turbotax for military You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. Turbotax for military However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Turbotax for military Table 19-2. Turbotax for military Tuition and Fees Deduction at a Glance Do not rely on this table alone. Turbotax for military Refer to the text for more details. Turbotax for military Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. Turbotax for military Where is the deduction taken? As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Turbotax for military For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. Turbotax for military What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Turbotax for military What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Turbotax for military Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. Turbotax for military Payments with borrowed funds. Turbotax for military You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Turbotax for military Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Turbotax for military Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Turbotax for military Student withdraws from class(es). Turbotax for military You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Turbotax for military Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Turbotax for military Eligible educational institution. Turbotax for military An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Turbotax for military S. Turbotax for military Department of Education. Turbotax for military It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Turbotax for military The educational institution should be able to tell you if it is an eligible educational institution. Turbotax for military Certain educational institutions located outside the United States also participate in the U. Turbotax for military S. Turbotax for military Department of Education's Federal Student Aid (FSA) programs. Turbotax for military Academic period. Turbotax for military An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Turbotax for military If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Turbotax for military Related expenses. Turbotax for military Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Turbotax for military Prepaid expenses. Turbotax for military Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. Turbotax for military See Academic period, earlier. Turbotax for military For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. Turbotax for military You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. Turbotax for military No Double Benefit Allowed You cannot do any of the following. Turbotax for military Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Turbotax for military Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Turbotax for military Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Turbotax for military For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Turbotax for military See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Turbotax for military Deduct qualified education expenses that have been paid with tax-free interest on U. Turbotax for military S. Turbotax for military savings bonds (Form 8815). Turbotax for military See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Turbotax for military Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Turbotax for military See Adjustments to qualified education expenses, later. Turbotax for military Adjustments to qualified education expenses. Turbotax for military For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Turbotax for military The result is the amount of adjusted qualified education expenses for each student. Turbotax for military Tax-free educational assistance. Turbotax for military For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. Turbotax for military See Academic period, earlier. Turbotax for military This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Turbotax for military Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Turbotax for military However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Turbotax for military 970, chapter 1. Turbotax for military The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Turbotax for military 970, chapter 1. Turbotax for military You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. Turbotax for military For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Turbotax for military 970. Turbotax for military Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Turbotax for military This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Turbotax for military If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Turbotax for military If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Turbotax for military Refunds. Turbotax for military A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. Turbotax for military See chapter 6 of Pub. Turbotax for military 970 for more information. Turbotax for military Some tax-free educational assistance received after 2013 may be treated as a refund. Turbotax for military See Tax-free educational assistance, earlier. Turbotax for military Refunds received in 2013. Turbotax for military For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Turbotax for military Refunds received after 2013 but before your income tax return is filed. Turbotax for military If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Turbotax for military Refunds received after 2013 and after your income tax return is filed. Turbotax for military If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. Turbotax for military See chapter 6 of Pub. Turbotax for military 970 for more information. Turbotax for military Coordination with Coverdell education savings accounts and qualified tuition programs. Turbotax for military Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Turbotax for military For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Turbotax for military Amounts that do not reduce qualified education expenses. Turbotax for military Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Turbotax for military Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Turbotax for military The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. Turbotax for military The use of the money is not restricted. Turbotax for military Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Turbotax for military This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Turbotax for military Sports, games, hobbies, and noncredit courses. Turbotax for military Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Turbotax for military However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Turbotax for military Comprehensive or bundled fees. Turbotax for military Some eligible educational institutions combine all of their fees for an academic period into one amount. Turbotax for military If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Turbotax for military The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Turbotax for military See How Do You Figure the Deduction , later, for more information about Form 1098-T. Turbotax for military Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). Turbotax for military Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Turbotax for military Table 19-3 summarizes who can claim the deduction. Turbotax for military How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Turbotax for military For details on figuring your MAGI, see chapter 6 of Publication 970. Turbotax for military How Do You Figure the Deduction Figure the deduction using Form 8917. Turbotax for military To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Turbotax for military Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Turbotax for military To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Turbotax for military Table 19-3. Turbotax for military Who Can Claim a Dependent's Expenses Do not rely on this table alone. Turbotax for military See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Turbotax for military IF your dependent is an eligible student and you. Turbotax for military . Turbotax for military . Turbotax for military AND. Turbotax for military . Turbotax for military . Turbotax for military THEN. Turbotax for military . Turbotax for military . Turbotax for military claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Turbotax for military Your dependent cannot take a deduction. Turbotax for military claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Turbotax for military do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Turbotax for military do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Turbotax for military Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. Turbotax for military If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Turbotax for military However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Turbotax for military You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Turbotax for military Eligible educator. Turbotax for military An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Turbotax for military Qualified expenses. Turbotax for military Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Turbotax for military An ordinary expense is one that is common and accepted in your educational field. Turbotax for military A necessary expense is one that is helpful and appropriate for your profession as an educator. Turbotax for military An expense does not have to be required to be considered necessary. Turbotax for military Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Turbotax for military You must reduce your qualified expenses by the following amounts. Turbotax for military Excludable U. Turbotax for military S. Turbotax for military series EE and I savings bond interest from Form 8815. Turbotax for military See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Turbotax for military Nontaxable qualified tuition program earnings or distributions. Turbotax for military See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Turbotax for military Nontaxable distribution of earnings from a Coverdell education savings account. Turbotax for military See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Turbotax for military Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. Turbotax for military Prev Up Next Home More Online Publications
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“Members of IRSAC devote significant amounts of their own time to provide us with valuable feedback regarding current issues of tax administration,” said Acting IRS Commissioner Danny Werfel. “We appreciate their important contribution.”

IRSAC is an advisory group to the entire agency. IRSAC’s primary purpose is to provide an organized public forum for senior IRS executives and representatives of the public to discuss relevant tax issues.

IRSAC draws its members from the tax professional community and members of academia. Based on its findings and discussions, IRSAC made several recommendations on a broad array of issues and concerns including:

The IRS needs sufficient funding to operate efficiently, provide timely and useful guidance to taxpayers and enforce current Law, so that respect for our voluntary tax system is maintained

The IRS should continue to expand voluntary correction programs to facilitate taxpayers self-reporting prior year non-compliance

Reducing Processing time for Form 2848, Power of Attorney and Declaration of Representative

Review the Transcript Request Policy for the Practitioner Priority Service (PPS) Toll-Free Line

Risk Assessing Large Taxpayers

Schedule M-3, Net Operating (Loss) Reconciliation for Corporations with Total assets with $10 million or more

Strategies to Increase use of On-line Payment Agreements

Modifications to Notice CP2030

Guidance to Practitioners regarding Professional Obligations

Treasury Circular 230 Enrollment of Former Internal Revenue Service Employees

IRSAC is administered by the National Public Liaison Office of the IRS. Today’s meeting is being held at the Melrose Hotel, 2430 Pennsylvania Ave, NW, Washington, DC.

The Turbotax For Military

Turbotax for military 1. Turbotax for military Definitions You Need To Know Table of Contents Other options. Turbotax for military Exception. Turbotax for military Certain terms used in this publication are defined below. Turbotax for military The same term used in another publication may have a slightly different meaning. Turbotax for military Annual additions. Turbotax for military Annual additions are the total of all your contributions in a year, employee contributions (not including rollovers), and forfeitures allocated to a participant's account. Turbotax for military Annual benefits. Turbotax for military Annual benefits are the benefits to be paid yearly in the form of a straight life annuity (with no extra benefits) under a plan to which employees do not contribute and under which no rollover contributions are made. Turbotax for military Business. Turbotax for military A business is an activity in which a profit motive is present and economic activity is involved. Turbotax for military Service as a newspaper carrier under age 18 or as a public official is not a business. Turbotax for military Common-law employee. Turbotax for military A common-law employee is any individual who, under common law, would have the status of an employee. Turbotax for military A leased employee can also be a common-law employee. Turbotax for military A common-law employee is a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done. Turbotax for military For example, the employer: Provides the employee's tools, materials, and workplace, and Can fire the employee. Turbotax for military Common-law employees are not self-employed and cannot set up retirement plans for income from their work, even if that income is self-employment income for social security tax purposes. Turbotax for military For example, common-law employees who are ministers, members of religious orders, full-time insurance salespeople, and U. Turbotax for military S. Turbotax for military citizens employed in the United States by foreign governments cannot set up retirement plans for their earnings from those employments, even though their earnings are treated as self-employment income. Turbotax for military However, an individual may be a common-law employee and a self-employed person as well. Turbotax for military For example, an attorney can be a corporate common-law employee during regular working hours and also practice law in the evening as a self-employed person. Turbotax for military In another example, a minister employed by a congregation for a salary is a common-law employee even though the salary is treated as self-employment income for social security tax purposes. Turbotax for military However, fees reported on Schedule C (Form 1040), Profit or Loss From Business, for performing marriages, baptisms, and other personal services are self-employment earnings for qualified plan purposes. Turbotax for military Compensation. Turbotax for military Compensation for plan allocations is the pay a participant received from you for personal services for a year. Turbotax for military You can generally define compensation as including all the following payments. Turbotax for military Wages and salaries. Turbotax for military Fees for professional services. Turbotax for military Other amounts received (cash or noncash) for personal services actually rendered by an employee, including, but not limited to, the following items. Turbotax for military Commissions and tips. Turbotax for military Fringe benefits. Turbotax for military Bonuses. Turbotax for military For a self-employed individual, compensation means the earned income, discussed later, of that individual. Turbotax for military Compensation generally includes amounts deferred in the following employee benefit plans. Turbotax for military These amounts are elective deferrals. Turbotax for military Qualified cash or deferred arrangement (section 401(k) plan). Turbotax for military Salary reduction agreement to contribute to a tax-sheltered annuity (section 403(b) plan), a SIMPLE IRA plan, or a SARSEP. Turbotax for military Section 457 nonqualified deferred compensation plan. Turbotax for military Section 125 cafeteria plan. Turbotax for military However, an employer can choose to exclude elective deferrals under the above plans from the definition of compensation. Turbotax for military The limit on elective deferrals is discussed in chapter 2 under Salary Reduction Simplified Employee Pension (SARSEP) and in chapter 4. Turbotax for military Other options. Turbotax for military In figuring the compensation of a participant, you can treat any of the following amounts as the employee's compensation. Turbotax for military The employee's wages as defined for income tax withholding purposes. Turbotax for military The employee's wages you report in box 1 of Form W-2, Wage and Tax Statement. Turbotax for military The employee's social security wages (including elective deferrals). Turbotax for military Compensation generally cannot include either of the following items. Turbotax for military Nontaxable reimbursements or other expense allowances. Turbotax for military Deferred compensation (other than elective deferrals). Turbotax for military SIMPLE plans. Turbotax for military A special definition of compensation applies for SIMPLE plans. Turbotax for military See chapter 3. Turbotax for military Contribution. Turbotax for military A contribution is an amount you pay into a plan for all those participating in the plan, including self-employed individuals. Turbotax for military Limits apply to how much, under the contribution formula of the plan, can be contributed each year for a participant. Turbotax for military Deduction. Turbotax for military A deduction is the plan contributions you can subtract from gross income on your federal income tax return. Turbotax for military Limits apply to the amount deductible. Turbotax for military Earned income. Turbotax for military Earned income is net earnings from self-employment, discussed later, from a business in which your services materially helped to produce the income. Turbotax for military You can also have earned income from property your personal efforts helped create, such as royalties from your books or inventions. Turbotax for military Earned income includes net earnings from selling or otherwise disposing of the property, but it does not include capital gains. Turbotax for military It includes income from licensing the use of property other than goodwill. Turbotax for military Earned income includes amounts received for services by self-employed members of recognized religious sects opposed to social security benefits who are exempt from self-employment tax. Turbotax for military If you have more than one business, but only one has a retirement plan, only the earned income from that business is considered for that plan. Turbotax for military Employer. Turbotax for military An employer is generally any person for whom an individual performs or did perform any service, of whatever nature, as an employee. Turbotax for military A sole proprietor is treated as his or her own employer for retirement plan purposes. Turbotax for military However, a partner is not an employer for retirement plan purposes. Turbotax for military Instead, the partnership is treated as the employer of each partner. Turbotax for military Highly compensated employee. Turbotax for military A highly compensated employee is an individual who: Owned more than 5% of the interest in your business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from you of more than $115,000 (if the preceding year is 2012, 2013, or 2014) and, if you so choose, was in the top 20% of employees when ranked by compensation. Turbotax for military Leased employee. Turbotax for military A leased employee who is not your common-law employee must generally be treated as your employee for retirement plan purposes if he or she does all the following. Turbotax for military Provides services to you under an agreement between you and a leasing organization. Turbotax for military Has performed services for you (or for you and related persons) substantially full time for at least 1 year. Turbotax for military Performs services under your primary direction or control. Turbotax for military Exception. Turbotax for military A leased employee is not treated as your employee if all the following conditions are met. Turbotax for military Leased employees are not more than 20% of your non-highly compensated work force. Turbotax for military The employee is covered under the leasing organization's qualified pension plan. Turbotax for military The leasing organization's plan is a money purchase pension plan that has all the following provisions. Turbotax for military Immediate participation. Turbotax for military (This requirement does not apply to any individual whose compensation from the leasing organization in each plan year during the 4-year period ending with the plan year is less than $1,000. Turbotax for military ) Full and immediate vesting. Turbotax for military A nonintegrated employer contribution rate of at least 10% of compensation for each participant. Turbotax for military However, if the leased employee is your common-law employee, that employee will be your employee for all purposes, regardless of any pension plan of the leasing organization. Turbotax for military Net earnings from self-employment. Turbotax for military For SEP and qualified plans, net earnings from self-employment is your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. Turbotax for military Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax. Turbotax for military Net earnings from self-employment does not include items excluded from gross income (or their related deductions) other than foreign earned income and foreign housing cost amounts. Turbotax for military For the deduction limits, earned income is net earnings for personal services actually rendered to the business. Turbotax for military You take into account the income tax deduction for the deductible part of self-employment tax and the deduction for contributions to the plan made on your behalf when figuring net earnings. Turbotax for military Net earnings include a partner's distributive share of partnership income or loss (other than separately stated items, such as capital gains and losses). Turbotax for military It does not include income passed through to shareholders of S corporations. Turbotax for military Guaranteed payments to limited partners are net earnings from self-employment if they are paid for services to or for the partnership. Turbotax for military Distributions of other income or loss to limited partners are not net earnings from self-employment. Turbotax for military For SIMPLE plans, net earnings from self-employment is the amount on line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040), Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for yourself. Turbotax for military Qualified plan. Turbotax for military A qualified plan is a retirement plan that offers a tax-favored way to save for retirement. Turbotax for military You can deduct contributions made to the plan for your employees. Turbotax for military Earnings on these contributions are generally tax free until distributed at retirement. Turbotax for military Profit-sharing, money purchase, and defined benefit plans are qualified plans. Turbotax for military A 401(k) plan is also a qualified plan. Turbotax for military Participant. Turbotax for military A participant is an eligible employee who is covered by your retirement plan. Turbotax for military See the discussions of the different types of plans for the definition of an employee eligible to participate in each type of plan. Turbotax for military Partner. Turbotax for military A partner is an individual who shares ownership of an unincorporated trade or business with one or more persons. Turbotax for military For retirement plans, a partner is treated as an employee of the partnership. Turbotax for military Self-employed individual. Turbotax for military An individual in business for himself or herself, and whose business is not incorporated, is self-employed. Turbotax for military Sole proprietors and partners are self-employed. Turbotax for military Self-employment can include part-time work. Turbotax for military Not everyone who has net earnings from self-employment for social security tax purposes is self-employed for qualified plan purposes. Turbotax for military See Common-law employee and Net earnings from self-employment , earlier. Turbotax for military In addition, certain fishermen may be considered self-employed for setting up a qualified plan. Turbotax for military See Publication 595, Capital Construction Fund for Commercial Fishermen, for the special rules used to determine whether fishermen are self-employed. Turbotax for military Sole proprietor. Turbotax for military A sole proprietor is an individual who owns an unincorporated business by himself or herself, including a single member limited liability company that is treated as a disregarded entity for tax purposes. Turbotax for military For retirement plans, a sole proprietor is treated as both an employer and an employee. 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